A look at the hotel-demand impact of events in two European markets, Düsseldorf and Lisbon, that were canceled due to COVID-19.
HENDERSONVILLE, Tennessee—After examining the effect of cancelled events such as Austin’s SXSW festival in the U.S., the next step was to examine whether markets in Europe were experiencing the same pattern.
Analysis of Düsseldorf’s canceled ProWein event and the similarly canceled BTL Lisbon trade show reveal both similar and different patterns in the proportions of demand, revenue and revenue-per-available-room losses as a result of these events’ cancellations. STR’s analysis differentiates between hotel performance impacts that can be attributed to the event cancelation itself, and those more broadly linked to the travel slowdown due to COVID lockdown and quarantine measures. (STR is the parent company of Hotel News Now.)
ProWein—a wine and spirits trade show—normally takes place each year in mid-March in Düsseldorf, Germany, a market that is a well-established meeting hub for Europe. This canceled event, which in 2020 was scheduled for Sunday, 15 March, to Tuesday, 17 March, has recently drawn an estimated 60,000 attendees, many of whom were staying overnight in the city.
Similarly, BTL (Bolsa Turismo Lisboa) is a tourism fair also held annually in mid-March, which was scheduled for Wednesday, 11 March, through Sunday, 15 March. In 2019, BTL Lisbon recorded approximately 75,000 participants with further growth expected in 2020.
The loss of the 2020 ProWein and BTL Lisbon events resulted in an expected performance deficit to the Düsseldorf and Lisbon markets, respectively, compared to performance when the events occurred in 2019. The unexpected finding, however, is how the cancellation of these moderate-sized events corresponded with an outsized negative impact on the market’s major financial indicators—rooms revenue and revenue per available room. Proportionally, the losses on ProWein’s and BTL Lisbon’s rooms revenue and RevPAR premiums were between two and three times greater than its corresponding drop in rooms demand from cancellation.
2020 performance visualized
The graphics below help to illustrate which of the year-over-year deficits are the result of losing the premiums that these events would have brought, in addition to the dips that are seen as a result of the general COVID travel deficits. To maintain consistency in comparing two distinct events, “Impacted Days” in each respective market were identified.
While the ProWein trade show lasts three days, STR data suggest that this event impacts the Düsseldorf market for four days starting on the pre-event Saturday. Subsequently, performance summaries below review results for the four-day period of 14 March through 17 March in 2020.
Meanwhile, in Lisbon, data suggests that attendees do similarly arrive a night before the event starts, but then also stay through the day following the event. Accordingly for BTL, we have set a seven-day “Impacted Days” period looking at the five days of the event plus the lead-in and lead-out days.
Normal demand for ProWein’s impacted period in Düsseldorf (based on the surrounding weeks’ matched days) shows that the market has a baseline “normal” demand of 48,000 cumulative rooms. The ProWein event adds additional 14,000 rooms over the period normal. Meanwhile, in Lisbon, the normal demand is around 108,000 rooms sold over the typical period in March, with BTL bringing a 21,000-room premium over that week.
Both markets show significant demand losses. Düsseldorf, in particular, took a hit not only from the loss of the event demand premium but also the sharp drop-off in additional business due to quarantine measures.
COVID’s drain on room demand exceeded by two to three times the lost demand premiums brought by the ProWein and BTL events during a typical event year.
The result was an 85% demand drop year over year in Düsseldorf, with the non-event loss (“COVID factor”) accounting for close to three-quarters of this drop. In Lisbon, the non-event loss accounted for almost the same proportion of the overall loss.
Shifts in rooms revenue tell a much different story between the two events. In Düsseldorf, the premiums brought by the ProWein event are more dramatic compared to the proportion of premiums brought to the Lisbon market by BTL.
While Düsseldorf experiences a 200% boost in rooms revenues from ProWein, the premium brought to the Lisbon market by the BTL event is up about 37%.
Bringing the 2020 canceled event periods into focus: The event premium loss accounts for about three-quarters of the €14.3-million ($15.5 million) year-over-year drop in Düsseldorf hotel revenues.
Meanwhile, about 40% of the €9.7-million ($10.5 million) loss in Lisbon’s rooms revenues is due to the lost BTL premiums.
The comparative patterns in the rooms revenue results are matched very closely by the proportions in RevPAR shifts.
The 2019 ProWein event period corresponded with an average daily RevPAR premium of €157 on top of the daily €76 market baseline, with total daily RevPAR averaging €233 over the four event days. As a result, approximately 75% of the total average daily RevPAR loss to Düsseldorf hotels in 2020 can be attributed to the loss of the ProWein event.
In Lisbon, the year-over-year RevPAR decline of €108 is mostly the result of general COVID-19 travel deficits, with the cancellation of the BTL event premium accounting for about 22% of this overall loss.
For both markets, COVID-19 is certainly the cause of both event premium losses as well general travel losses. Sadly, this COVID tale of two cities has and will play out in other cities around the globe until the green shoots of recovery start to appear.
M. Brian Riley and Brannan Doyle are research analysts with STR’s Market Insights division.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.